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With plug-in electric cars starting to ship, and many more scheduled to come online in the next few years, the market for electric vehicle batteries is heating up.

Electric vehicles put new demands on batteries. In particular, batteries need to hold a lot of energy (to go a long distance on a single charge) and they need to have a long life (years of dependable service).

Battery technology has progressed quickly, especially in the past decade. The familiar “car battery” (e.g. the Sears Diehard) has been with us for over a century. It is heavy and doesn’t hold a lot of energy, which is to say that a car powered with lead-acid batteries won’t go far on a single charge. In addition, the battery is likely to wear out after only a few hundred charge/discharge cycles.

Next came NiCad (nickel-cadmium) batteries. These are what power your electric shaver and your cordless phone. They hold more energy per pound than lead-acid batteries, and can go thru several hundred charge/discharge cycles. A peculiar downside is that they have a “memory effect” where they loose their power-holding capacity if they aren’t fully discharged before being recharged.

The big breakthrough was NiMH (nickel-metal hydride) batteries. This technology was developed by a very bright and energetic older gentleman named Stanford Ovshinsky. It was truly a game changer. NiMH batteries were first tried in the electric vehicles used in California several years ago. In 1999, General Motors used NiMH batteries in the EV-1 electric vehicle, giving the car a range of 140 miles. Southern California Edison put a combined 7 million miles on 320 electric Toyota RAV4’s, and concluded that the NiMH battery would last 130,000 to 150,000 miles. Ovonics was acquired by Energy Conversion Devices (NASDAQ: ENER). In 1994, GM bought 60% of ECD, and then in 2000 Texaco bought GM’s share of ECD, and in a 50/50 partnership with ECD, created a spinoff battery company called Cobasys (which owns the patent to NiMH technology). Shortly thereafter, Texaco was acquired by Chevron (NYSE: CVX).

Carmakers today are mostly focused on lithium batteries. In the past several years lithium batteries have become the standard for laptops and cell phones, because they hold the most charge of commonly available batteries. Tesla Motors, which started shipping it’s first electric car this year, leveraged the existing battery technology by making a battery pack out of 6800 lithium batteries, each of which are about the size of a standard “AA” penlight battery.

Three other companies are working on lithium battery technology for electric vehicles. General Electric (NYSE: GE) has become an investor in A123 Systems. A123 has developed a technology called Nanophosphate™ lithium ion. In March of this year the Norwegian electric car maker Think signed a contract with A123 to supply batteries for one of its cars. A123 is also under consideration as a supplier for the new Chevy Volt.

Electrovaya (Toronto: ELF.TO) has licensed Exxon Mobil’s (NYSE: XOM) new lithium battery membrane technology. Electrovaya will be producing some electric vehicles itself, and has also contracted to supply lithium batteries to carmakers Tata and Miljo from a manufacturing facility in Norway.

Altair Nanotechnologies (NASDAQ: ALTI) has developed a lithium battery technology called Nanosafe™. Altair is supplying batteries to carmaker Phoenix Motorcars. The outstanding thing about the Altair batteries is how quickly they can be charged. The cars produced by Phoenix can go 130 to 250 miles on a charge, but can be recharged in as little as 10 minutes. This is likely to be a game changer for electric cars in general, and set a new standard that all electric automakers must strive toward.

Disclosure: none

Source: Market for Electric Vehicle Batteries Is Heating Up